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The spectacular decline of US stocks was the biggest event of last week. Dow Jones experienced a record fall: it lost more than 1,000 points in one day.

The US dollar took its chance to recover. Traders fear that the Federal Reserve will raise interest rates faster than expected. This may hurt profits of American companies, but boosts demand for the cheap dollar.

The USD index managed to return above 90.00 and has some chance for stabilization. Resistance is at 91.00.

Investors took profit on their bullish EUR/USD positions, and the pair slid by 1.4%. It has to rise above 1.2345 to resume uptrend. Decline below 1.2220 will open the way down to 1.2125 and 1.2080, although we think that the euro should be more or less stable given the euro area’s strong economy.

GBP/USD also corrected down last week. The Bank of England offered the pound a positive boost. It raised the UK economic forecasts and said that interest rates probably needed to rise sooner and faster than it had previously thought. However, the general market selloff affected the pound, and GBP/USD failed to stay above 1.40. Support is at 1.38 and 1.3665. Yet, fundamentals have improved and the pair may try to resume uptrend after some consolidation.

Australian and New Zealand dollars suffered because of the market’s risk aversion and the fact that central banks of these nations don’t plan to raise interest rates. Both AUD/USD and NZD/USD recovered by the end of the week, but still closed below the weekly moving averages.

Forex economic calendar for the coming days includes UK inflation figures on Tuesday, and US consumer inflation and retail sales on Wednesday. The flash European GDP figures will always be released in the middle of the week. Australian employment and US PPI will come out on Thursday and the speech of the RBA governor together with British retail sales and the US building permits are awaited on Friday.

In this video Tutorial Lesson 9: about the LOTS
You will learn that spot Forex trading was only available in specific amounts of base currency called lots.
A standard size of a lot equals to 100 000 units of a base currency. Later on, when Forex market opened for traders with smaller capital, a mini and even a micro lot became available.

On the daily chart of XAU/USD, bulls manage to hold off an enemy attack at the $1,306-1,308.50 support. Another test of this area in case of success will increase the possibility of a pullback to $1273 and lower. The condition necessary for the uptrend’s resumption is a convincing break of resistance at $1350 an ounce.

On H1, much will depend on bulls’ ability to lead the pair outside of descending channel.

On the daily chart, USD/CAD the inability of bulls to return the pair inside the previous consolidation range of 1.2670-1.2895 was the first signal of their weakness.

On H1, if USD/CAD breaks below support at 1.2560 and 1.2490, the risks of the pair getting to 88.6% of the junior “Shark” pattern. To continue rising and reach 88.6% target of the senior “Shark” pattern, the pair has to convincingly rise above resistance at 1.2665.

The 89 Moving Average has acted as support, so there's "Triple Bottom" pattern, which has been confirmed. The main intraday target is the next resistance at 1.2358 - 1.2384. If we have a pullback from this area, there'll be an opportunity to have another decline.

Bulls faced with resistance at 1.2334, so we should keep an eye on the 34 Moving Average as the next bearish target. This line could be a departure point for an upward price movement towards the nearest resistance at 1.2358 - 1.2384.

There's a "V-Bottom" pattern, so the price is consolidating. It's likely that the pair is going to reach the closest resistance at 1.3895 - 1.3944. If a pullback from these levels happens little later on, there'll be a moment to have a decline in the direction of the next support at 1.3741.

The price is consolidating near the 34 Moving Average. It seems like there's a developing "Flag" pattern. So, if a pullback from the nearest resistance at 1.3895 - 1.3944 happens, we could have a bearish price movement towards another support at 1.3795 - 1.3763.

On the daily chart of USD/CHF, the inability of bulls to keep the pair above 0.9410 points at their weakness. Return to correction low at 0.9465 will allow us to talk about the “Head and Shoulders” pattern. To continue the decline the pair has to break below January low.

On H1, USD/CHF is forming “Spike and ledge” and “Bat”. To continue the decline, bears need to pull the dollar below support at 0.93 and 0.9280.

On the daily chart, GBP/USD bulls managed to defend the important level of 1.3830 and want to consolidate in the 1.3800-1.4150 area. If the pair renews February low, the risks of it going to 88.6% target of the “Bat” pattern will increase.

On H1, GBP/USD bulls try to form “Wolfe waves”. If they manage to do it, the pound may rise to the upper border of the descending channel at $1.41-1.4150. The pullback to the downside will be a selling signal.

THE US DOLLAR WEAKNESS AHEAD OF CPI DATA
08:37 14.02.2018
Today we expect the CPI and Retail Sales data at 15:30 MT time. If we look at charts, the greenback is depreciating against all currencies.

Why is it happening with the US dollar and what should we expect from the inflation data?

Let’s look at some forecasts.

Nomura predicts the deceleration of the core inflation in January. They declare monthly core CPI at 0.2% compared to the December one of 0.3%. Such reduction will lead to the annual core CPI decrease by 0.1 percentage point from 1.8% in December to 1.7% in January. Talking about the headline CPI data, they expect an increase from 0.1% to 0.4% in monthly figures and the rise of the annual to 2.0%. Such growth is based on higher gasoline prices and firm growth of food prices.

RBC has almost the same forecast as Nomura about the core and headline CPI. Moreover, RBC does not anticipate any real momentum until the second quarter of 2018. They expect that negative effects from the last year will roll off the year calculation only by that time. The annual headline inflation will be able to come closer to 3% in the third quarter.

The forecast of Barclay does not differ from the previous ones a lot. They expect the monthly core level to be at 0.2% and the annual one at 1.6%. The monthly headline inflation will increase by 0.4%, the annual by 1.9%.

The average forecast of the main economic experts declares the slight decrease of the monthly data of the core CPI growth from 0.3% to 0.2%. The headline CPI is anticipated to rise by 0.2 percentage points (0.1% to 0.3%) m/m.

Let’s sum up.

The rise of inflation is important for the US dollar. If the CPI is higher, it is more likely that the Fed will raise interest rates. An increase of the interest rates always leads to the strengthening of a domestic currency, so the greenback will have chances to strengthen its positions.

But the data is mixed, we expect the fall of the core CPI growth and the rise of the headline CPI at the same time. However, we can say that the forecasts are not negative. The fall is just by 0.1 percentage points. The annual headline CPI forecast is still below 2%, but not too much lower.

So why the dollar is weakening a lot?

The reason can be hidden in the lack of beliefs in the strong dollar. The market is used to the weak greenback, that is why every negative data can cause its further fall. Another reason is the strengthening of the global equity markets after the great selloff. Furthermore, US 10-year yields are now down to lows on the day, as Treasuries are more bid on the day.

The main trend is still bullish. Also, there's a "Triple Bottom" pattern, which has been confirmed. So, the market is likely going to test the nearest resistance at 1.2405 - 1.2434 in the short term.

There's a confirmed "Double Top" pattern, so the market is likely going to reach the 89 Moving Average in the coming hours. If a pullback from this line happens little later on, there'll be an opportunity to have another upward price movement.

There's a bearish "Pennant", so the pair is likely going to achieve the nearest support at 1.3741. Meanwhile, if a pullback from this level happens afterwards, bulls will probably try to reach the next resistance at 1.3895 - 1.3944.

The market is consolidating between the Moving Averages. The main intraday target is the closest support at 1.3763 - 1.3741. This area could be a departure point for a bullish price movement in the direction of another resistance at 1.3895 - 1.3944.

DOES THE VALENTINE’S DAY REALLY AFFECT THE FOREX MARKET?
10:41 14.02.2018
The Valentine’s Day is one of the days during a year that brings the biggest amount of money to an economy.

An interesting fact is that for this holiday people buy presents not only for their lovers but for families and friends as well. That is why consumer spending increases a lot. This year US consumers are expected to contribute to the economy nearly $19.6 billion, even more than last year record of $18.6. It is an important indicator because consumer spending is the largest part of GDP, it contains nearly 70% of the output.

Valentine’s Day has an influence on markets as well. The five best-selling gifts are candy, greeting cards, evening out, flowers and jewelry. It means that these industries will be more volatile before and during the February 14. Prices and demand significantly increase in these markets. For example, Japanese chocolate industry gets more than half of its $5 billion in annual sales on Valentine’s Day. Countries, where these industries are more developed, will get the higher profit on the holiday. These profits will contribute to retail sales and consumer spending data for February.

At the same time, if we look at the dynamics of stock indexes during the Valentine day itself, the picture will not be as rosy. It turns out that since 1928 the S&P 500 has closed up on just 40% of Valentine’s Days. The Dow Jones Industrial Average has risen on 14 February just 43% of the time. Maybe it’s a coincidence, but maybe traders just more eager to spend time with their loved ones than to buy stocks. Or maybe this time stocks will get luckier?

Making a conclusion, we can say that the Valentine’s Day has an impact on markets and Forex market as well. The huge money contribution has a positive influence on a domestic economy. Countries with more developed industries, that are popular on Valentine’s Day, have higher profit. This effect will have a medium-term impact on the market. However, stock markets depreciate on the day of love.

On the daily chart, EUR/JPY reached 88.6% target of a “Shark” pattern. As a result, risks of a pullback increased. A pin bar increases the risks of a correction. Its high forms resistance at 133.40. To continue the decline to 113% target of the “Shark” patterns, bears need to pull the euro to February low.

On H1, EUR/JPY formed two bars with lower bottom wicks. It means that bulls are ready to counterattack. They want to trigger a “Shark” pattern with a target of 88.6%.